The imposition of a lumpsum tax will result in __________ of both the Average Fixed Cost (AFC) and the…
A lump-sum tax increases fixed cost without varying with output. At each positive output level, both average fixed cost and average total cost therefore increase, shifting…
Choose your answer
The imposition of a lumpsum tax will result in __________ of both the Average Fixed Cost (AFC) and the Average Total Cost (ATC) curves.
Answer and explanation
Correct answer A
A lump-sum tax increases fixed cost without varying with output. At each positive output level, both average fixed cost and average total cost therefore increase, shifting their curves upward.
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Maharashtra and Goa SET (MH SET)